Apple Reports Solid Q4 Profits And Revenues, But Restatement Likely - InformationWeek

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Apple Reports Solid Q4 Profits And Revenues, But Restatement Likely

Strong sales of Macs and iPods fueled a 27% jump in Apple's fiscal fourth-quarter profits.

Apple Computer Inc. on Wednesday reported a 27 percent jump in profits in the fiscal fourth quarter on strong sales of Mac computers and iPod media players.

The Cupertino, Calif., company, however, warned investors that the financial results were "preliminary," given that a restatement was likely following completion of an investigation into its mishandling of stock options.

Nevertheless, the company said profits for the quarter ending Sept. 30 were $546 million, or 62 cents a share, compared with $430 million, or 50 cents a share, the same period a year ago. Revenues increased to $4.84 billion from $3.68 billion.

During the quarter, Apple shipped 1.6 million Macs, a solid 30 percent more than a year ago. The company shipped 8.7 million iPods, a 35 percent jump from the year before.

Steve Jobs, chief executive of Apple, said in a statement that the strong quarter capped an "extraordinary year for Apple."

The company sold more than 39 million iPods and 5.3 million Macs during the fiscal year, while also moving its line of computers to the Intel platform from PowerPC chips built by IBM. The x86 platform from Intel also runs Windows PCs.

"Looking forward, 2007 is likely to be one of the most exciting new product years in Apple's history," Jobs said.

This fiscal year, the company also will have to settle problems arising from how it made some stock option grants between 1997 and 2002. An internal investigation found that that grants had dates that preceded the approval of the grants. Such a practice, called backdating, retroactively grants options on dates when a company's stock price is relatively low, maximizing the potential profits for the option holder.

The Securities and Exchange Commission is investigating well over 100 companies, most of them in the technology industry, for backdating. Apple has turned over its findings to the SEC, which has yet to make a ruling. The company said Jobs knew of some of the irregularities, but did not receive, or benefit from, these grants.

Apple says it's likely it will have to restate past financial statements to record non-cash charges for compensation expense and related cash and non-cash tax adjustments relating to past stock option grants.

Apple ended the 2006 fiscal year with more than $10 billion in cash, and has increased annual revenues by $11 billion in the last two years, Peter Oppenheimer, the company's chief financial officer, said.

For the first quarter of the 2007 fiscal year, Apple projected revenues from $6 billion to $6.2 billion, and earning from 70 cents to 73 cents a share.

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